Here's our summary of key economic events over the weekend that affect New Zealand, with news it is a week where central banks in China, New Zealand, Sweden, South Korea, Turkey, Malaysia, and South Africa will be deciding on the course of monetary policy.
In China, their housing market is retreating, with no sign buyers are ready to return to their damaged market, no matter now much Beijing throws developers in rescue funding.
Not helping is a surge in the pandemic spread there. China’s new daily Covid cases jumped above 25,000 yesterday and a six-month high. Guangzhou had the highest tally, with more than 9,000 new cases among its 19 million residents. It is not a high load, but the impact is enormous given their official response to any infection. It is a pall that hangs over the entire global economy.
Inside China, there are calls to ensure the 2023 growth target is set no lower than +5%.
There was a general election in Malaysia over the weekend, with four candidates vying for the top job. Two are claiming victory. It looks like the Islamist PAS party in Muhyiddin's Perikatan grouping, securing the largest number of seats of any single party, and that Perikatan group saw sizeable gains. Malaysia seems more divided than ever.
In the US, the Fed has been assuming banks have much more liquidity than they need, as it starts reducing its US$9 tln balance sheet in a reservoir draining plan. This excess liquidity is assumed to make the Quantitative Tightening process run smoothly. But now some influential insider economists are wondering if that will be so. They see the US banks responding to the change in their excess liquidity, rather than the amount of it. If that is the case, there may be bumps in the road if the trading banks over-react to the Fed's pullback. Certainly worth watching. Large American banks may be hooked on a liquidity drug.
And staying in the US the only significant data out over the weekend was its October existing home sales outcomes and that was weak, like all recent housing data from there. They are now openly calling this market in "a slump", with volumes down almost -6% from the prior month and almost -30% from a year ago. The downshift is building as this is the ninth straight month of falls and apart from the pandemic, these sales levels are at decade lows. But at the moment, sellers are holding off making deals, so prices are holding for the sharply fewer buyers who need to buy.
The relatively sudden pullback by a range of large tech companies, and the resulting layoffs, may be starting a similar track on their labour market. Twitter is the icon here, but certainly not the largest.
Talk of a 2023 US recession is rising, with fears built on a turn in their long-resilient labour market.
In Canada, the pressure on producer prices is not easing, with unexpectedly strong hikes in October from September, and from a year ago.
The CPI inflation rate in Japan climbed to 3.7% in October from 3.0% a month earlier. This was the highest reading in 40 years, and comes amid high prices for food and raw materials, as well as persistent yen weakness. Speculation is rising that the Bank of Japan is about to change course, but of course there is a very long track record of commitment to the current ultra-loose poilcies.
In Europe, economic prospects seem to be improving, helped by a milder-than-expected winter, lower energy costs, and a faster-than-expected building of energy resilience away from Russia. The overall EU contraction is now likely to be very minor now, "with risks tilting to the upside".
The UST 10yr yield starts today at 3.83% and up +1 bps from Saturday and basically back to where it was a week ago. The UST 2-10 rate curve is little-changed at -70 bps. And their 1-5 curve is unchanged at -74 bps. And their 30 day-10yr curve is holding at -3 bps. The Australian ten year bond is unchanged at 3.64%. The China Govt ten year bond is also little-changed at 2.84%. And the New Zealand Govt ten year will start today also unchanged at 4.22%.
The price of gold will open today down -US$1 at US$1751/oz. A week ago it was at US$1766/oz.
And oil prices start today up +US$1/bbl from this time Saturday at just on US$80/bbl in the US while the international Brent price is just over US$87.50/bbl. These are still approaching -10% falls for the week.
The Kiwi dollar will open today at 61.5 USc and little-changed. Against the Australian dollar we are holding higher at 92.2 AUc and its highest since April 2022. Against the euro we are still at 59. euro cents. That all means our TWI-5 starts today at 70.6 and our highest since September.
The bitcoin price is now at US$16,554 and virtually unchanged from this time Saturday, but down -2.6% from a week ago. Volatility over the past 24 hours has been modest at +/- 1.0%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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